Central Bank cut the key interest rate to 11%

UFA, 31 July 2015. /Bashinform News Agency, Arthur Basyrov/. The Board of Directors of the Bank of Russia has decided to reduce the key rate from 11.50% to 11.00% per annum. The Central Bank made this decision given that the balance of risks is still biased towards a significant economic slowdown, despite some increase in inflationary risks. This is reported in a statement of the regulator.

The Central Bank informs that in July there was a temporary acceleration in annual inflation. This was conditioned by higher increase in tariffs for public utilities than last year. According to the Bank of Russia as of July 27, the annual growth rate of consumer prices amounted to 15.8% against 15.3% in June. However, after a significant increase in the beginning of the month the weekly inflation rate again dropped to 0,0-0,1%. The decreased consumer demand amid a significant reduction in real incomes limits the growth of consumer prices.

According to the forecast of the Bank of Russia, slower growth in consumer prices will continue along with weak domestic demand. Annual inflation in July 2016 will amount to less than 7% and will reach the target level of 4% in 2017. In the future, the Central Bank will decide on the level of the key rate depending on the change in the balance of inflationary risks and risks of the economy slowdown.

In addition, further economic situation will depend on world prices for energy, as well as the ability of the economy to adjust to external shocks. Thus the likelihood that the cost of oil for a long time will remain at a level no higher than $ 60 per barrel increased.